Dhaka, Bangladesh
Bangladesh Bank plans tripartite meet to strengthen ADR

Bangladesh Bank plans tripartite meet to strengthen ADR

The Bangladesh Bank (BB) is planning to hold a tripartite meeting to find out ways to strengthen the Alternative Dispute Regulation (ADR) system to settle the huge number of cases in the banking sector, reports BSS. “ADR is gradually becoming a popular process to settle the huge number of cases in the banking sector. The central bank is also providing all sorts of supports to expedite the process and making it more effective,” a high official of the central bank told the agency Thursday. He said BB is going to organise the meeting in the next month with Association of Bankers, Bangladesh (ABB) and Bangladesh International Arbitration Center (BIAC) to make ADR more effective. In a recent meeting with managing directors of the commercial banks, the senior official said, bankers also emphasised on strengthening the ADR process to settle the claims of the Non-Performing Loan (NPL) as it is increasingly becoming a matter of concern for the banking sector. “Based on the meeting, BB is taking necessary steps to organise the tripartite meeting to make smooth the process of ADR,” he added. Under the ADR process, there were 5,832 cases involving Taka 4,180 crore till June 2017. Out of those, 3,586 cases involving Taka 1,078 crore were settled. The rate of settlement under the process is around 61 percent. The recovery rate under the process is also good as around Taka 466 crore was recovered till June 2017. The BB senior official said Rajshahi Krishi Unnayan Bank (RAKUB) is the best performer to settle the banking related cases under the ADR process. Out of the total cases, RAKUB got a total of 4,356 cases involving Taka 63.86 crore in June 2017. The bank settled 2,757 cases involving Taka 53.08 crore during the period. The bank also recovered Taka 29.92 crore till June 2017. Talking to the agency, RAKUB Deputy General Manager Nazmul Haque said RAKUB is planning to further expedite the process. According to Bangladesh Bank’s latest data, out of the total outstanding loans of the around Taka 7,53,000 crore, the amount of NPL was Taka 80, 307 crore up to September 2017. The percentage share classified loan to total outstanding was 10.67 percent. Another BB official said a total of 24 commercial banks are settling their cases under ADR process. He urged the all commercial banks, including Islami Bank Bangladesh Limited (IBB) and Rupali Bank and Pubali Bank, to come forward for settling their cases under the ADR process. He hoped that the amount of NPL will come down at a tolerable level under the ADR process. Earlier on Tuesday, the government has pushed through parliament the amendment of a law allowing four members of a family to sit on the board of banks as directors amid a walkout by the opposition and widespread criticism outside. The MPs passed the ‘Bank Company (Amendment) Bill 2018’ into a law in voice vote when Finance Minister AMA Muhith tabled it on Tuesday. The Jatiya Party legislators walked out of parliament earlier, alleging the amendment will destroy Bangladesh’s banking sector. Many allege the law will create opportunity for the families to reign in the banks. It was clear in the comments made by the finance minister at the Secretariat earlier in the day. “There are always objections to laws whenever we make some,” he told reporters. About the allegation of giving the families’ the opportunity to virtually run the banks, he said, “Now an entire family controls a bank. But I think we’ve made it more specific.” The Cabinet on May 8 last year cleared the draft of the bill, also allowing directors of commercial banks to serve three consecutive terms, or nine years. A bank director could remain in the board for two consecutive terms or maximum six years in line with the law before the changes. Many related to the banking sector have been critical of the Cabinet move, saying the decisions will create opportunity also for the influential people to retain directorship. This is the sixth amendment of the Act originally passed in 1991. It went through changes for the last time in 2013. When the parliamentary standing committee on the finance ministry scrutinised the Bill in October last year, its chairman Muhammad Abdur Razzaque had said, “We want to know from the finance minister by what logic will the law be amended.” He, however, changed his tone later and said they were recommending passage of the Bill as it was. Tabling the Bill on Tuesday, Muhith said it was necessary to pass it in order to remove opacity in three provisions relating to directors in the existing law. “There are concerns that these ambiguities may hinder the attempts of the banks to speed up their operations. “If someone from a family does business separately and pay taxes on his or her own, he or she cannot be called dependent on the family,” he argued. Rustum Ali Faraji, an independent MP, placed a motion to send the Bill to the parliamentary standing committee on public accounts before passage “The Bill has surprised us. The law was amended five times in personal interest, not public interest.” “The directors take loans themselves by using the names of their relatives instead of developing the banking sector. Subsequentlym they become loan defaulters. The money cannot be recovered. We can’t amend the law for some looters. They loot the money and send it abroad,” he added. The Jatiya Party’s Fakhrul Imam, referring to the finance minister, said, “You speak out of patriotism, the spirit of independence whenever you utter the word ‘rubbish’. When you say a huge amount of money is being stolen from the banks, you also say it from the spirit of Liberation War. “There is nothing to make you realise. You are the nation’s pride. Our experiences cannot be compared with yours,” he said. The MP then demanded withdrawal of the Bill, saying, “No-one can claim a bank as his or her own. If you make a law to safeguard the interests of the sponsor directors, the remaining 90 percent will be deprived. The nation will benefit if you withdraw the Bill.” Opposition Whip Nurul Islam Omar said a person uses his or her influence if he or she remains on a post for a long time. Nurul Islam Milon MP said, “The banking sector is on the edge of collapse. People are afraid of keeping money in the banks now. The year 2017 was disastrous for the sector. No control of the Bangladesh Bank is visible. “Now this Bill has been brought to destroy the banking sector from the roots. The finance minister is an experienced and learned person. He should withdraw it,” he said. Rowshan Ara Mannan said the government was bowing down to pressure by the bank owners by amending the law. The finance minister then placed his arguments and urged the opposition lawmakers to withdraw their motion. Opposition Chief Whip Tajul Islam Choudhury stood up and sought the speaker’s permission to speak. Deputy Speaker Fazle Rabbi Miah, however, denied him permission to speak, saying no MP can stand up like Tajul amid a discussion on a Bill. He advised Tajul to raise his points during the discussion on their motion. Tajul, however, left the House with the other opposition MPs at the time. They returned after the passage of the amended law.

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